Re Buildark Constructions Pty Ltd (in liq) - [2022] VSC 653

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2021 01218

IN THE MATTER of BUILDARK CONSTRUCTIONS PTY LTD (IN LIQUIDATION)
(ACN 166 977 902)

BETWEEN:

SUMMER BREEZE PTY LTD (ACN 165 267 541)	Plaintiff
v
RICHARD TRYGVE ROHRT in his capacity as liquidator of BUILDARK CONSTRUCTIONS PTY LTD (IN LIQUIDATION) (ACN 166 977 902)	First Defendant
BUILDARK CONSTRUCTIONS PTY LTD (IN LIQUIDATION) (ACN 166 977 902)	Second Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	28 October 2022
CASE MAY BE CITED AS:	Re Buildark Constructions Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2022] VSC 653

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CORPORATIONS — Winding up in insolvency – Creditor submits proof of debt – No funds available for distribution for creditors – Liquidator declines to adjudicate on creditor’s proof of debt by reason of lack of funds – Creditor applies to the Court under reg 5.6.53(2) of the Corporations Regulations 2001 (Cth) for a decision in respect of its proof of debt – Starmaker (No 51)Pty Ltdv Mawson KLM Holdings Pty Ltd (2005) 193 FLR 339; Simto Ltd v Court as liq of Carob Industries Pty Ltd (in liq) (1977) 138 FLR 232 discussed – Winding up preceded by period in which company was subject to deed of company arrangement – On occasion that winding up order made, deed of company arrangement terminated and plaintiff awarded costs of application – Order for costs post-dated the relevant date fixed by ss 9, 513A and 513C of the CorporationsAct 2001 (Cth) (‘the Act’) – Whether claim for costs was provable in the winding up – Discussion of the operation of ss 553(1) and 553(1A)(a) of the Act – Foots v Southern Cross Mine Management Ltd (2007) 234 CLR 52 discussed – Claims of plaintiff including claim for legal costs admitted to proof in the winding up.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Evans KC	Rockman & Rockman
For the Defendants	Mills Oakley

TABLE OF CONTENTS

Summer Breeze’s application...................................................................................................... 3
Legal principles to be applied..................................................................................................... 3
Summer Breeze’s evidence.......................................................................................................... 9
Claim in respect of building contract to complete 576 Esplanade, Mornington – $1,788,651.83.............................................................................................................................................. 12
Variations to Tempo contract in relation to defects – $19,044.97......................................... 13
Variation to Tempo contract in relation to defects – $5,648.22............................................. 14
Liquidated damages pursuant to the Buildark contract up to 24 September 2018 – $323,500 14
Interest and fees paid to National Australia Bank in relation to facilities – $249,256.86.. 15
Interest and fees paid to National Australia Bank in relation to facilities from 1 November 2018 until 14 January 2019 – $165,505.65................................................................................. 15
Insurance premium for the Mornington construction site – $40,403.................................. 16
Cost of expert defects report from Curie Constructions – $74,800...................................... 16
Quantity surveyor assessments – $22,949.63.......................................................................... 17
Finnis architectural work to complete project – $15,095.34.................................................. 17
Legal fees arising from breach by Buildark of the Buildark contract.................................. 17
Survey work by Farren Group –…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Buildark Constructions Pty Ltd (in liq)

Details

AGLC: Re Buildark Constructions Pty Ltd (in liq) [2022] VSC 653
Case: [2022] VSC 653
Decision Date: 28 October 2022

CaseChat Overview and Summary

The matter in Re Buildark Constructions Pty Ltd (in liq) involved a creditor seeking to have their debt recognised and adjudicated upon in the winding up of the company. The company had previously been under a deed of company arrangement, which terminated upon the winding up order. The creditor, Starmaker (No 51) Pty Ltd, applied to the court under regulation 5.6.53(2) of the Corporations Regulations 2001 (Cth) to decide on their proof of debt, following the liquidator's refusal due to a lack of funds available for distribution. This application raised the issue of whether the creditor's claim for costs, awarded post-dating the relevant dates stipulated by sections 9, 513A, and 513C of the Corporations Act 2001 (Cth), was provable in the winding up.

The legal issues that arose included the interpretation and application of sections 553(1) and 553(1A)(a) of the Corporations Act 2001 (Cth) in relation to the creditor's claim for costs, and whether such costs were provable in the winding up of the company. The court referred to the decision in Foots v Southern Cross Mine Management Ltd (2007) 234 CLR 52, which discussed the conditions under which claims for costs can be considered provable in a winding up. The court also considered previous cases such as Starmaker (No 51) Pty Ltd v Mawson KLM Holdings Pty Ltd and Simto Ltd v Court as liq of Carob Industries Pty Ltd (in liq), which dealt with similar issues of creditor claims and the adjudication of debts in the context of winding up.

In reaching its decision, the court concluded that the creditor's claims, including the claim for legal costs, were provable in the winding up of the company. The court found that despite the timing of the award of costs, the creditor's right to those costs was established prior to the winding up, and therefore, the claim was valid and should be admitted to proof. The court's reasoning was based on the operation of sections 553(1) and 553(1A)(a) of the Corporations Act 2001 (Cth), which provide that a creditor's claim is provable if it arose before the winding up and is undisputed or has been adjudicated upon. The court determined that the creditor's right to costs was established prior to the winding up, and thus, the claim was provable.

Orders